How to Eliminate Risk with a Wrap Plan
You offer benefits to your employees to attract and retain the best talent in today’s competitive market. But did you know that you may have legal and regulatory risks from those benefits?
Employee lawsuits can happen when the details of your plans are not clearly and fully communicated. In 2018 alone there were more than 6,000 employee lawsuits exceeding $300 million in settlements. And penalties from a Department of Labor audit could be substantial.
So, the question is: What happens when an employee is denied a claim or a surviving spouse did not receive a benefit they were expecting? They hire a lawyer to sue everybody involved, including you.
You may believe that your insurance carrier or broker has already shielded you from your ERISA liability associated with your benefits, but this is a common misconception. As the employer, it is your sole responsibility to be compliant with the law.
How do you protect yourself before this happens?
Well, the best way is by creating a Wrap plan. A Wrap plan “wraps around” your existing insurance policy, or certificate of insurance, with supplemental information that fills in the gaps necessary to ensure ERISA compliance.
ERISA requires you to provide both a written Plan Document and a Summary Plan Description (SPD) for each benefit you offer.
With a Wrap plan you will:
Save time, because you will only need to file a single 5500 versus one for each health and welfare benefit. This will not only reduce the time for you to administer your regulatory requirements; it will also minimize the potential for errors.
A wrap plan will also decrease your risk in the event of a lawsuit or audit. Plus, having a Wrap plan would give you the advantage of having your case tried in Federal Court without a jury or the potential for punitive damages.
Where do you turn for help when it’s time to create your Wrap plan?
ERISAPros has the expertise to help secure your risk and save you time and money with Plan Documents as well as SPDs, and Form 5500s.
Small to mid-sized companies enjoy our intelligent, turn-key, online Wrap-Tight℠ application while larger and more complex businesses can benefit from comprehensive professional services from our team of experts.
What’s the next step?
It’s simple. Contact your insurance broker or call us directly at 866-488-6582 to schedule a compliance assessment.